If a file is password-protected, will any temporary files be written that contain un-encrypted bits of the file? I see there is a configuration setting for the location of temporary files and automatic backups. Automatic backups can be disabled, but I assume temporary files may be written, and I’m wondering if they might contains clear text. I just discovered OfficeLibre today so I’m not knowledgeable about it.
It’s hard to say if that is so for all possible cases, but they should be encrypted; you may look at tdf#51819 for a case when it wasn’t so, and it was fixed.
By the way: the same bug is still not fixed in AOO.
I think you can encrypt the folder for the user at operating system level.